A glossary of Bitcoin and cryptocurrency terms you need to know

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Illustration: Benoit Tessier (Reuters)

Tokens, cryptocurrencies, and digital assets are often used interchangeably but are different from each other.

Digital asset is a broader term that refers to assets that exist in digital form and can be stored, transferred, and managed electronically. Examples include cryptocurrencies, tokens, and NFTs (non-fungible tokens).

Cryptocurrency is a digital asset that relies on cryptography to facilitate secure financial transactions. It is decentralized and operates on a distributed ledger technology called a blockchain. Bitcoin is an example of a cryptocurrency.

All cryptocurrencies are digital assets, but not all digital assets are cryptocurrencies.

The token, on the other hand, is created on top of an existing blockchain network. For example, Shiba Inu, a popular meme-based coin, was created on the Ethereum blockchain network. It doesn’t have its own network.

That means one blockchain network can support multiple tokens. Ethereum, for instance, is the foundation for several tokens.



This article was originally published by a qz.com

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